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Problem - Bond Prices and Returns Koc Finansman has issued a 8.2% coupon bond with 13 years to maturity and Oyak Yatirim has issued a

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Problem - Bond Prices and Returns Koc Finansman has issued a 8.2% coupon bond with 13 years to maturity and Oyak Yatirim has issued a 9.6% coupon bond with 13 years to maturity. The yield to maturity is 8.5% and the face value is $1000 for both of the bonds. (Assume that bondholders will receive annual interests.) a. If you buy one of each bond today and sell them next year, calculate the return on your investment (separately). Assume that the yield to maturity for both Koc Finansman and Oyak Yatirim bonds remain at 8.5% next year. (Intermediate computations should not be rounded. Fill up the blanks with percentages rounded to the 1 decimal place.) Koc Finansman % Oyak Yatirim % Rate of return b. Is the rate of return on the higher coupon bond (Oyak Yatirim) higher than that of the lower coupon bond (Koc Finansman)? O Yes O No

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